Accounting and tax

All Iraqi resident companies will pay corporate tax at the standard rate of 15%. However, companies operating in the oil & gas sector will pay tax at a higher rate of 35%;

The Iraqi government does not levy value added tax (VAT) on goods and services;

Capital gains from the sale of assets will be taxed at the normal corporate rate of 15%;

Dividends received by Iraqi resident companies from other resident companies will be completely exempt of corporate tax. However, dividends from non-resident companies will be taxed at the corporate rate of 15%;

The Iraqi government does not levy withholding taxes on dividend payments and royalty payments. However, interest payments from an Iraqi company to a non-Iraqi company will be subject to tax at 15%;

Businesses are allowed to carry forward their losses for a maximum period of 5 years. Also, the losses can only offset up to 50% of the company’s annual income;

Tax returns will be filed annually by the 31st of May. Payment of the tax amount will also be done once within 21 days of the assessment of the returns by the General Commission for Taxes;

Employers will be required to withhold up to 15% of their employee’s salary every month as their personal tax. This amount will then be remitted by the employer to the tax authorities;

Iraq has signed multiparty agreements with 9 countries in the Arab League and bilateral agreements with 32 countries including Japan, Germany, South Korea, UK and USA to reduce withholding tax on payments abroad;

For an active trading company, the Healy Consultants’ fees to efficiently and effectively discharge our Client’s annual company accounting, auditing and tax obligations is US$2,300. Following receipt of a set of draft accounting numbers from our Client’s company, Healy Consultants will more accurately advise accounting and tax fees. For a dormant company, Healy Consultants’ fee is only US$950.

Legal and compliance

Incorporation Regulations

An Iraqi LLC can be setup with 1 director and 1 shareholder, while an Iraqi JSC will require 5 directors and 5 shareholders. There is no requirement for either director(s) or shareholder(s) to be Iraqi nationals;

While the minimum share capital required to register an Iraqi LLC is US$860, the government can request for higher capital when incorporating in specialized fields. For example – the share capital required to register an LLC in the oil & gas sector is US$860,000;

All foreign directors and shareholders of an Iraqi company will go through a security check by the Ministry of Interior before the registration process can be completed. The security check will be completed within 3 to 6 months;

To register a branch office or a representative office, our Clients will be required to submit i) audited annual financial statements of the parent company for the previous year and ii) copies of the contract signed between the company and the government;

Every Iraqi JSC will have a Board of Directors which will have between 5 and 9 members. Two amongst the members will be appointed as the chairperson and vice-chairperson of the company;

A branch office and a representative office must have a manager and a deputy manager duly appointed by the parent company;

A company meeting must be convened within 30 days from the date of issuance of the Certificate of Incorporation. Following this, the company name will be registered with the local Chamber of Commerce;

In order to sell their holdings in an LLC, all shareholders must first approach the other shareholders through the director. Only after 30 days have lapsed since this notification, can the shares be sold to individuals outside the company;

If the company registration application is rejected, our Clients will have the option of appealing to the Ministry of Trade within 30 days of the notification. In case, the appeal also gets rejected, our Client can approach the applicable Court of First Instance, whose decision shall be final;

Before a company can begin operating, it must register all its employees for social security and pay i) a social security deposit and ii) an estimated payroll amount for 3 months to the Ministry of Labour;

Labour Regulations

While all foreign workers will require a work permit to operate in Iraq, Arab workers will be treated as Iraqi workers and so, will not require a work permit;

An employee can only be made to work on probation for a maximum period of 3 months. After this period, the employer must either hire the employee on a full-time basis or fire him/her;

Employment contracts in Iraq can either be i) indefinite term contract (for permanent work) or ii) fixed term contract (for temporary/seasonal work)

In Iraq, employees cannot be forced to work longer than 6 days per week at a maximum of 8 hours per day. However, overtime work is permitted, provided the employees are compensated with an additional 50% of their hourly wage;

Employees are entitled to 20 days of paid annual leave for every year of work which must be used by the employee as no carry forward is allowed. The leave will increase by 2 days for every 5 years of work in the company;

Employees are also entitled to 30 days of paid sick leave for every year of work. It is important that employees produce a medical certificate on the subsequent day to avail of the sick leaves;

All employers must contribute 12% of their employee’s salary to their social security account;

An employee’s contract can only be terminated under the following conditions i) both employee and employer mutually agree ii) employee was hired on a limited period contract and the period has ended iii) employee wishes to end the contract iv) employee has been ill and has been unable to work for the past 6 months v) the employee has become handicapped due to an accident and cannot perform his/duties and vi) the employer can show that the employee’s position has become redundant;

Reporting Regulations

All Iraqi resident companies will submit audited annual financial statements to the Iraq Registrar of Companies. JSCs will additionally include the following information: i) details of all significant contracts concluded by the company in the previous financial year and ii) other holdings of all shareholders who own at least 10% in the JSC;

Companies are also required to file their social security returns quarterly;

Branch offices and representative offices will also submit their annual financial statements to the Registrar of Companies. Additionally, branches will submit i) financial statements of their parent company for the financial year and ii) an affidavit informing the Registrar of any changes including changes in the board of directors or the head office of the parent company;

Miscellaneous Regulations

All companies must reserve 5% of their profits every year until it reaches an amount equivalent to 50% of the paid-up share capital;

Due to prevailing currency controls, the amount of currency that can be carried out of Iraq in bank notes without approval from the Central Bank is US$10,000;

All entrepreneurs who wish to import goods into Iraq will apply for an import license which will be valid for 3 months. Extension of only 1 month can be granted upon request.

Contact us

Testimonial

“Pirster Pte is happy with the work that Healy Consultants undertook for the company. International incorporation can be fraught with opacity, anxiety and vulnerability - especially if it is being done remotely as we did. Healy Consultants worked really hard to make it transparent, straight forward and confidence-inspiring. I look forward to working with Healey Consultants again on future work and happily recommend them to others.”

Fiona Thompson, Managing Director Pirster Pte.

“We had taken Healy Consultants assistance in incorporating our entities in some of the complicated jurisdictions. Their approach right from the beginning has been very systematic, clear and efficient. It has been a pleasure to work with all of them.”

“Thank you Healy Consultants for swiftly project managing my engagement. From the moment I met you in Singapore Healy Consultants attended to my requirements and specific needs. I am more than satisfied with your service. Moreover, your weekly updates allowed me to continue to focus my attention on my global business while trusting you to deliver as promised.”

“Thank you Healy Consultants, you were instrumental in setting up of my Hong Kong based company, the whole process was completed in a professional and timely manner.”

Terry Skews, CEO Brittany Offshore Limited

“Healy Consultants, a professionally managed firm with clear understanding and knowledge about what client expects from them and delivers the same in a professional and timely manner. Kudos to their team.”

“Incorporating any company is comparable to setting the foundation blocks of your new company building, which you aim to build in the best location available. By choosing Healy Consultants you are laying the perfect foundations.”

“The one word that defines Healy Consultants is perfect professionalism. If you have Healy to set up your business abroad, you could focus on the operational overhead and let Healy take care of the rest. From Incorporation to Taxation, it’s a one stop solution. Rest assured, you will have the best people in the Industry working for you and providing you with the best possible information and suggestions.”

Raja Chakraborty, Director Streamlyn Pte. Ltd.

“Thank you Healy Consultants for successfully project managing our business set up in Kuwait, Lebanon, Qatar and Bahrain.”

“When it was time to establish a Space Academy in Singapore, TriVector needed a knowledgeable firm that could not only help us establish our infrastructure, but could also advise on the local and regional business climate. Healy was that firm, which is why we've been satisfied Healy Consultants for almost five years now.”

“Healy Consultants were instrumental in the set up of our company. They have continued to provide exceptional support and advice over the years.”

Susan Gunnery, Managing Director Qudoss Group

“Healy Consultants is the best firm that we have ever worked with. Through our entire business relationship we were satisfied with provided level of quality and services. Healy Consultants have been responsive and detail oriented which has allowed us to stay focused on our business and not getting distracted with small details.”

Testimonial

“Pirster Pte is happy with the work that Healy Consultants undertook for the company. International incorporation can be fraught with opacity, anxiety and vulnerability - especially if it is being done remotely as we did. Healy Consultants worked really hard to make it transparent, straight forward and confidence-inspiring. I look forward to working with Healey Consultants again on future work and happily recommend them to others.”

Fiona Thompson, Managing Director Pirster Pte.

“We had taken Healy Consultants assistance in incorporating our entities in some of the complicated jurisdictions. Their approach right from the beginning has been very systematic, clear and efficient. It has been a pleasure to work with all of them.”

“Thank you Healy Consultants for swiftly project managing my engagement. From the moment I met you in Singapore Healy Consultants attended to my requirements and specific needs. I am more than satisfied with your service. Moreover, your weekly updates allowed me to continue to focus my attention on my global business while trusting you to deliver as promised.”

“Thank you Healy Consultants, you were instrumental in setting up of my Hong Kong based company, the whole process was completed in a professional and timely manner.”

Terry Skews, CEO Brittany Offshore Limited

“Healy Consultants, a professionally managed firm with clear understanding and knowledge about what client expects from them and delivers the same in a professional and timely manner. Kudos to their team.”

“Incorporating any company is comparable to setting the foundation blocks of your new company building, which you aim to build in the best location available. By choosing Healy Consultants you are laying the perfect foundations.”

“The one word that defines Healy Consultants is perfect professionalism. If you have Healy to set up your business abroad, you could focus on the operational overhead and let Healy take care of the rest. From Incorporation to Taxation, it’s a one stop solution. Rest assured, you will have the best people in the Industry working for you and providing you with the best possible information and suggestions.”

Raja Chakraborty, Director Streamlyn Pte. Ltd.

“Thank you Healy Consultants for successfully project managing our business set up in Kuwait, Lebanon, Qatar and Bahrain.”

“When it was time to establish a Space Academy in Singapore, TriVector needed a knowledgeable firm that could not only help us establish our infrastructure, but could also advise on the local and regional business climate. Healy was that firm, which is why we've been satisfied Healy Consultants for almost five years now.”

“Healy Consultants were instrumental in the set up of our company. They have continued to provide exceptional support and advice over the years.”

Susan Gunnery, Managing Director Qudoss Group

“Healy Consultants is the best firm that we have ever worked with. Through our entire business relationship we were satisfied with provided level of quality and services. Healy Consultants have been responsive and detail oriented which has allowed us to stay focused on our business and not getting distracted with small details.”

“Not only did Healy Consultants have expert knowledge of local requirements, they also understood my needs as a foreigner, which is something lacking with the Singaporean consulting firms I spoke to. They drove the process from start to completion. I’m more than satisfied with the service.”